Markets Now: The Dow’s 98 Point Gain That Almost Wasn’t

Want to know why the Dow Jones Industrial Average is doing what it's doing? Check back here for a semi-live look at the volatile markets from Barron's reporters.

4:36 p.m. What a wild day for market--and just looking at the headline indexes doesn't do it justice.

Yes, the Dow Jones Industrial Average advanced 98.46 points, or 0.4%, to 24,216.05, while the S&P 500 rose 0.6% to 2715.13, and the Nasdaq Composite gained 0.8%, to 7503.68.

But check out this chart of E-Mini Dow futures contracts, which show what the benchmark did from yesterday's close until today's:

Yes, the Dow was off more than 100 points before the open, rallied though the morning to get flat, and then even higher during the afternoon, before dipping at the close. After yesterday's reversal, it was good to see the Dow find its footing, at least for one day.

Dow Gains 173 Points Amid Earnings Optimism

3:16 p.m.Walgreens Boots Alliance (WBA) should be celebrating joining the Dow Jones Industrial Average this week. Instead, Amazon.com (AMZN) spoiled the party for the drug-store chain and the blue-chip benchmark.

So while the Dow Jones Industrial Average is up 173.75 points, or 0.8%, to 24,291.34, it lags behind the S&P 500, which has risen 0.9% to 2712.16, and the Nasdaq Composite, which has gained 1.1% to 7,524.76.

Markets have been uncertain of late, as major indexes have been volatile while seeing big swings in both directions due to trade policy rhetoric. Brian Belski, chief investment strategist at BMO Capital Markets believes the longer-term outlook for US stocks continues to be positive despite an increasing amount of anxiety.

One of the big reasons: corporate earnings. Forecasts for earnings-per-share growth of the S&P 500 in 2018 and 2019 have slowly moved higher in recent months. “Furthermore, analysts have also revised price targets higher, with the current bottom-up consensus price target for the S&P 500 implying a roughly 13.5% gain over the next 12 months,” he added.

Do fundamentals outweigh the risks? —Varada Bhat

Dow Gains 62 Points as Market Watches Trump, Trump Watches Market

11:32 a.m. The market is up slightly this morning as it tries to recover from yesterday's trade-induced plunge.

President Donald Trump suggested on Wednesday that the administration will rely on existing tools instead of creating new rules to restrict Chinese investment in U.S. technology sector. The softened tone might have given the market some relief.

The Dow Jones Industrial Average is up 62.45 points, or 0.3%, to 24,180.04, while the S&P 500 has risen 0.4% to 2709.12, and the Nasdaq Composite has gained 0.5% to 7480.07.

Some analysts think this is not surprising. While the market is watching and reacting to the president's every move, Trump is doing the same. "There is a limit to how far the president may take the trade battle if stocks fall enough," writes John Lynch, chief investment strategist for LPL Financial, in a note.

And with midterm elections coming up in a few months, Republicans will have to think twice before they do anything to damage their reelection chances. "History tells us the president’s party usually loses about 25 seats in the first midterm election, making economic conditions particularly important for Republicans," writes Lynch. That's why China’s retaliatory trade actions have mainly targeted political pressure points such as agriculture.

David Donabedian, chief financial officer of CIBC Private Wealth Management, echoes to that opinion: “President Trump does have an incentive to settle the trade issue before the midterm elections and declare a victory before there is any meaningful impact on the economy."

On another note, as we approach the end of this quarter, energy stocks have clearly become the biggest winner in the past three months, driven by rising oil price. The Energy Select Sector SPDR ETF (XLE) has surged 12% since the beginning of April, outpacing consumer discretionary's 7% gain and tech's 5.5% rise. —Evie Liu

As Dow Dips 45 Points, Can Calm Prevail?

10:12 a.m. Markets are exceedingly calm to start Thursday trading with all of the major indexes within a quarter of a percentage point of where they closed yesterday. The Dow Jones Industrial Average has fallen 45 points, or 0.2%, to 24,069, while the S&P 500 has added 0.1% to 2702, and the Nasdaq Composite has gained 0.2% to 7458.

The Russell 2000 Index and the MSCI Emerging Markets Index have been slightly more active, with the EM index down 0.4% and the small cap Russell 2000 down 0.3%. They’re moving in the same direction today, but that is in contrast to their inverse performance over the last few months, as noted by Marketfield Asset Management’sMichael Shaoul and Timothy Brackett this morning:

“We would note in particular the highly unusual degree to which the RTY index and the MXEF index have diverged this quarter. Although outperformance by one against the other is a commonplace occurrence, a multi-month period of outright divergence (as took place between early April and this week) is highly unusual (the last one took place during early 2008 when many claimed that EM had “de-coupled” from the developed world) and unlikely to be sustained. We would also note that the RTY index’s ratio against the MXEF is close to its post-Trump election peak, leaving the valuation gap between these measures very stretched.”

The Russell 2000 has gained 6.8% this quarter – after being up as much as 11.6% last week – while the MSCI Emerging Markets Index is down a symmetrical 6.8% over the same time period. —Nicholas Jasinski

Nothing?

7:54 a.m. Nothing. That's how the market has decided to follow up yesterday's big reversal. With absolutely nothing. S&P 500 futures, Dow Jones Industrial Average futures, and Nasdaq Composite futures are all little changed this morning. And that's understandable. Trade uncertainty continues to weigh. Earnings season will be starting soon. And the first half of the year ends tomorrow. In an uncertain world, why do anything crazy?

And besides, end of quarter moves aren't to be taken too seriously anyway, says DataTrek's Nicholas Colas. That's because the action is dominated by portfolio managers cleaning up their portfolios before having to report their holdings, meaning the moves are less about fundamentals and more about window dressing. "Be very careful about extrapolating moves that happen at the end of a quarter," he advises.

Advice taken. —Ben Levisohn

Sign up to Review & Preview, a new daily email from Barron’s. Every evening we’ll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.